The impact of the U.S. housing bubble and bust on employment, 2001–09

January 03, 2011

From 2001 to 2006, nonfarm payroll employment in residential construction increased by 29.1 percent, considerably faster than the 12.7-percent growth in the construction sector as a whole. In contrast, from 2006 to 2009, nonfarm payroll employment in residential construction declined by 36.6 percent, while employment in the entire construction sector decreased by 21.5 percent.

The effects of the housing bubble were not limited to the construction sector. From 2001 to 2006, employment in cement and concrete product manufacturing and in construction machinery manufacturing grew by 5.1 percent and 9.0 percent, respectively. Employment in the real estate credit industry and the mortgage and nonmortgage loan brokers industry ballooned by 52.0 percent and 119.5 percent, respectively.

As the housing bubble deflated, industries that heavily depend on demand from residential construction began to suffer considerable losses in employment. From 2006 to 2009, employment in mortgage and nonmortgage loan brokers and in real estate credit decreased by 54.5 percent and 44.0 percent, respectively. Wood product manufacturing (−35 percent) and cement and concrete product manufacturing (−24.4 percent) also experienced losses in employment.